The Future of Benefits
Max Rispler, Employee Benefits Advisor, LIC
With the roaring 20s coming back into the picture, we recall the twists and turns the past 100 years brought to the health insurance industry. Nobody knows the exact future of healthcare, but we have a good idea of what is coming. A few trends that companies need to be prepared for are benefit technology, biologics/6+ tiered drug cards, and robust benefit offerings by smaller employers. Medicare for all and waiving student loans are two highly debated topics in politics. These will take years to come to fruition. Even with Medicare for all, there will still be a private health insurance system offered by employers. Amazon and Google have made leaps into the healthcare industry with recent acquisitions. These two could cause major disruption.
California tech companies have their eyes on the health insurance industry. The focus is to integrate everything together to simplify the process for employers. This has been a tricky topic with new companies coming out every year with the “latest, greatest, and best” integration system. The industry is moving towards integrated benefits, human resources, compliance, and payroll. Small employers will enjoy the ease of access and simplified ability to offer robust benefit packages to their employees. This could allow for better retention and growth for smaller companies. No longer will an employee give up a great benefit package by switching from a large employer to a smaller one. The best brokers will focus on two or three vendors, and they will offer these free or for minimal charge to employers.
Seventy four percent of prescription drugs currently in clinical development are first-in-class medicines. This can only mean one thing: drug costs will continue to go up for biologics. The United States is one of the last countries that continues to research and come out with new life saving drugs. These drugs work with the cells of the body to help people with rheumatoid arthritis, psoriasis arthritis, and advanced cancers. Patent protections have allowed for drug companies to recoup their costs to create these biologic drugs. Costs are now in the millions of dollars for certain treatments. This has put carriers in a tight spot when their specific stop loss might be $200,000. In the years to come, we will see employers and carrier do one of two things. They will increase the tiering on drug cards to protect against these biologics or they will carve them out entirely. Both could spell disaster for the few hundred cases that these drugs are used on each year. There will be an ability to save more people in the future, but the cost will continue to go up without a cap. Brokers need to be aware of this and have conversations with their clients about the future of biologics.
Small employers are enjoying new technologies that allow for a more robust benefit offering. Voluntary benefits allow for employers to offer a benefit without paying for it. Certain carriers might have a minimum required, but they are flexible with certain offerings. This allows small employers to offer benefit packages comparable to Fortune 500 companies. This will continue to evolve in the future. There are new ancillary benefits that can be offered each year to employers. The focus is for small businesses to offer a competitive benefit package for retention and growth. Brokers should be having discussions about voluntary benefits with their clients.
We may not know the exact route that the healthcare industry will take, but we can prepare for some likely possibilities. It is always better to be proactive than reactive. Small employers have a brighter future with technology and voluntary benefit offerings. A broker should advise their client on these changes, offerings, and how to prepare for the future. If you have any questions or would like a complimentary consultative look at your benefits package, please send an email to [email protected] or call our office at 586-446-3563 and ask for Max Rispler.